Wednesday, July 13, 2011

Netflix announces 60% price increase

Netflix just announced a dramatic shift in their pricing model which will eliminate their current $9.99 plan that gives the customer unlimited streaming and one DVD at a time. Instead, the new offering will force customers that want the same level of content to sign up for a $7.99 DVD plan and an additional $7.99 for the unlimited streaming. That is a 60% price increase for current subscribers and has already prompted plenty of negative feedback from the user base.

It will be interesting to see what the effect of this move has on the long term business of Netflix. There is no denying the effect Netflix has had not only on the rental market but the entire entertainment industry. Despite being a game changer it appears that reality is catching up with the company and the operating costs need to be balanced with the price points.

As a long term Netflix user I will definitely be reconsidering my subscription. I rarely go through more than 3 DVD's in a month and the streaming selection is still far too limited to justify paying these prices. Looks like I will be giving RedBox some more business and beefing up my DVR queue pretty soon.